European shares held their auto and mining-led gains yesterday afternoon though the broader market struggled to regain the morning's near 20-month peak.
Among the standouts, Interbrew fell three per cent after the Belgian brewer said it could take a stake in Brazil's AmBev, a move that could trigger a bidding battle between Interbrew and US rival Anheuser-Busch for the Latin American group.
With little in the way of heavyweight corporate news on either side of the Atlantic, some investors were already hunkering down for the week's key economic data - Friday's US non-farm payrolls.
"Without a big macro theme, that is why we are in a sideways trend at the moment," said Daniel Birch of Execution brokerage.
"We are currently seeing a huge rally in commodity prices and that is why we are seeing the mining stocks higher today," he added.
By 1500 GMT, the FTSE Eurotop 300 index was up 0.2 per cent at 1,019 points, after hitting a session high of 1,022.9 points, its best level since the middle of July in 2002.
Nearly two shares rose for each one that fell, with volume moderate.
The timing of the next move in US interest rates remains a background feature.
Federal Reserve Chairman Alan Greenspan talks about the current account deficit at 1730 GMT and his commments will be closely watched by investors for any clues to the timing of higher interest rates.
"The rumour mill has started to consider whether the Fed is going to raise rates or not, and we see that the chances of doing this in three or four months are quite high," Birch said.
The DJ Euro Stoxx 50 index rose 0.4 per cent to 2,930 points. On Wall Street, the Dow Jones industrial average was off 0.2 per cent at 10,653 points as New York investors took a breather after Monday's rally.
The tech-studded Nasdaq Composite was 0.2 per cent higher at 2,063 points.
The auto sector was among the best performers in Europe as the dollar's bounce dampened the feisty euro's ability to make euro zone exports like cars more expensive in the United States. The euro hit a life high of above $1.29 mid-February but has since eased to trade around $1.23, though still high enough to trigger calls from politicians for the European Central Bank to cut euro zone interest rates when it meets tomorrow.
Europe's automakers gathered in Geneva acknowledged a slow start to 2004 but said sales would eventually strengthen this year as new models and a firmer market help them overcome a wobbly dollar and fierce price competition.
Germany's Volkswagen rose 2.8 per cent as it plans to save around four billion euros over the next two years. DaimlerChrysler gained 1.5 per cent on news that its flagship Mercedes unit expects 2004 profits to match last year's.